Monday, October 27, 2014

Ethiopian government signs $865 mln railway financing

(Adds details of ECA financing, banker's quote)

By Sandrine Bradley

Oct 27 (Reuters) - The Ethiopian government has closed a $865 million financing package that funds the development of some of the country's railway infrastructure.

The proceeds of the financing will be used to build the Awash-Weldia/Hara Gebeya Railway Project, one of the key railway corridors that will form part of the National Railway Network of Ethiopia.

The financing is split between a $450 million seven-year commercial loan, which includes a syndicate of lenders from Europe, Africa, the Middle East and the US, and pays 375 basis points over Libor.

A $415 million 13-year loan backed by the Swedish Export Credit Guarantee Board (EKN), Eksport Kredit Fonden (EKF) and Swiss Export Risk Insurance (SERV) export credit agencies is also included.

Credit Suisse acted as co-ordinating commercial facility arranger and export credit agency facility lead arranger. Some of the loans have already been disbursed.

In addition to Credit Suisse, the mandated lead arrangers for the EKF, EKN and SERV backed facilities are Deutsche Bank, ING Bank and KfW IPEX-Bank, respectively.

EKF committed $181 million to the ECA tranche, SERV committed $151 million and EKN committed $83 million.

Turk Eximbank provided a parallel financing of $300 million for the Turkish goods and services under the same project.

"This is a huge financing for Ethiopia, it is the first commercial deal of this size we have seen. Banks have a growing appetite for the Ethiopian market and we expect to see more deals like this," one banker on the deal said.

This project is being undertaken by the Ethiopian Railways Corporation. It will be built in the next three years and will run between the Ethiopian towns of Awash and Weldia.

Yapi Merkezi Insaat ve Sanayi AS, a Turkish company, is the appointed contractor on the project and will design and construct 389km of the railway line.

The financing has also been arranged under the OECD Common Approaches for Officially-Supported Export Credits and Environmental and Social Due Diligence which commit OECD countries to taking environmental and social impacts into account when granting officially supported export credits.

Ethiopia is rated B by Standard and Poor's, B1 by Moody's and B by Fitch. (Editing by Tessa Walsh)